Soaring taxes gives rise to cigarette black market

Global Business

About 1 in 5 deaths per year in the United States are related to smoking. As a result, many states are trying to raise tobacco taxes to make smoking more costly and less appealing, but one of the unintended consequences of higher taxes has been a soaring black market for cigarettes. CCTV’s Karina Huber is in New York City which has the highest cigarette taxes in the US.

  • High taxes are forcing smokers to find other ways to get cigarettes.
  • Nearly 60 percent of cigarettes bought in New York City are contraband.
  • The average cost for a pack of cigarettes in New York City is almost $15. That’s because there’s a state tax of $4.35, a city tax of $1.50 and a federal tax of $1.01.
  • That’s almost three times what it costs in the state of Virginia, the source of nearly half the smuggled cigarettes.
  • Data has shown for every 10 percent increase in the cost of cigarettes, there is a seven percent drop in teens who smoke and four percent of adults.
  • In recent years, adult smoking in New York City has crept up. Seilback believes the solution lies in raising taxes further and beefing up law enforcement.